(Corrects government stake to 55% (not 62%), paragraph 10)
* PTSB to buy 7.6 billion euros of performing loans
* NatWest to take 20% stake in PTSB as part of the deal
* More than half of Ulster Bank loans now offloaded
By Padraic Halpin
DUBLIN, July 23 (Reuters) - Britain's NatWest Group
agreed to sell assets from its Irish arm to Permanent TSB
, a move the mortgage lender and analysts described as a
"once in a generation opportunity" for PTSB to compete with
Ireland's two dominant banks.
The deal includes 25 of Ulster Bank's 88 branches and 7.6
billion euros ($8.94 billion) of gross performing loans, the
majority relating to non-tracker mortgages, as well as
performing micro-SME loans and its asset finance business, the
group said as its Irish exit gathered pace on Friday.
On top of receiving a cash consideration, NatWest will take
a 20% stake in the enlarged share capital of PTSB. PTSB said it
did not envisage requiring new equity capital, meaning the Irish
state would not need to top up its current 75% holding.
Shares in PTSB, which had 14 billion euros worth of mainly
mortgage loans at the end of 2020 and now has 76 branches
nationwide, were 14.8% higher, at 1.40 euros, by 0735 GMT.
Shares in NatWest were up 1.8%.
The British bank announced in February that it would wind
down Ulster's 20 billion euro loan book as Chief Executive
Alison Rose slashes underperforming parts of the state-owned
lender after it swung to a loss in 2020.
It agreed last month to sell most of its Irish commercial
loan book, totaling 4.2 billion euros, to Allied Irish Banks
, one of Ireland's two main lenders, which is seeking to
strengthen its grip on the market after Ulster's exit.
AIB's chief rival Bank of Ireland is in talks to
buy the bulk of Belgian bank KBC's Irish assets, a move
that could leave just three retail banks.
PTSB, which will take on about 400 to 500 of Ulster Bank's
2,800 employees, said it expected to reach a legally binding
agreement in the fourth quarter, with the business transfer to
happen within the next 12 to 18 months.
The British and Irish governments will effectively both be
shareholders in PTSB upon completion, since NatWest remains 55%
taxpayer-owned, a legacy of the financial crisis of a decade
ago.
"The transaction represents a once in a generation
opportunity to add scale, substantially increasing earnings and
returns to merit a re-evaluation of the investment case," Davy
Stockbrokers analyst Diarmaid Sheridan wrote in a note.
($1=0.8500 euros)
(Additional reporting by Anna Irrera in London; Editing by
Jason Neely and Clarence Fernandez)